Microsoft has achieved a significant milestone by becoming the second company ever to reach a market valuation of $3 trillion. The tech giant achieved this feat shortly after announcing the layoff of 1900 employees from its gaming divisions. The company initially crossed the $3 trillion mark yesterday but experienced a slight dip before climbing again and closing at $3.01 trillion today, translating to $404.87 per share. Apple was the first company to reach a $3 trillion valuation in December of the previous year, and since then, Microsoft and Apple have been competing for the title of the most valuable company on Wall Street.
The surge in Microsoft’s stock value can be attributed in part to the company’s recent focus on AI developments, with a series of impactful product announcements contributing to significant stock gains on a weekly basis. However, this remarkable stock achievement comes on the same day as Microsoft’s decision to lay off 1900 workers from its gaming division.
The layoffs are seen as a consequence of Microsoft’s $69 billion acquisition of Activision Blizzard, which was finalized last year. A considerable number of affected employees were from Activision Blizzard divisions, including those associated with a survival game that has now been canceled. Phil Spencer, the head of gaming at Microsoft, described the layoffs as part of a broader strategy to establish a sustainable cost structure supporting the company’s overall growth. The president of Blizzard Entertainment, Mike Ybarra, also announced his departure from the company in the wake of these changes.
It’s worth noting that Microsoft had undergone a similar round of layoffs almost exactly one year ago, affecting 10,000 employees across all its divisions, including the gaming sector. In the company’s most recent earnings report released in October 2023, covering the quarter ending September 2023, Microsoft reported $56.5 billion in revenue, reflecting a 13% year-over-year increase. Xbox content and services revenue also saw a 13% year-over-year growth. The company is expected to unveil its full-year earnings for 2023 next week, providing a comprehensive overview of its financial performance.
In summary, Microsoft’s achievement of a $3 trillion market valuation showcases its robust standing in the market, while the layoffs in the gaming division underscore the complex dynamics and strategic shifts the company is undergoing in the ever-evolving tech landscape.